Germany’ first onshore wind auction at 57.1 €/MWh

The first onshore wind tender in Germany awarded 807 MW at an weighted average price of EUR 57.1/MWh (photo: iSTock)

The first onshore wind tender in Germany, under the reformed renewable energy law (EEG), awarded 807 MW at an weighted average price of EUR 57.1/MWh

The German results were announced 2 days after the 3 GW renewable energy tender in Spain, where wind claimed nearly all the volumes awarded. Of the 70 successful bids, 65 came from community projects confirming the key role of citizens in the German energy transition model. However, the tender results in both countries cannot be compared as they are the result of two very different auction designs. The Spanish system is unique in the EU in that it requires bidders to make a discount on the investment cost of a reference plant. It then applies marginal pricing where the cheapest bid determines the uniform price for all winners. In Germany, in contrast, the pay-as-bid mechanism grants institutional bidders the prices they have offered until the overall tender volume is met. A set of special rules was applied to bids from community projects including a longer period for the realization of the project, less requirements to take part in the tender and each successful community project was granted with the highest price achieved by any project in the process regardless the price the project developers had entered with.

Also, the German system offers this guaranteed price for 20 years, while the Spanish system offers less revenue stability - investors are exposed to changes in retribution levels which the Government applies every three years. The first revision in the systems’ parameters is set for 2019.

Giles Dickson, WindEurope CEO, said: “ Public engagement and the involvement of citizens is a key ingredient of a successful energy transition. We are delighted that the German wind sector is successfully handling the transition to the auctioning system, with a key role for community projects.“ He added: “This is the year where auctioning becomes the norm for onshore wind in Europe. The cost reduction trend that we've seen in offshore tenders since mid-2016 has been reinforced in the first two big onshore tenders this year – Germany and Spain. Onshore wind is today the cheapest option for new power generation”, and proceeded: “Germany set an example of how EU Member States should manage the transition towards competitive auctions. Technology-specific tenders providing revenue stabilisation are best suited to deploy wind energy cost effectively. A clear schedule and deployment volumes as outlined by the German EEG are also crucial to investment decisions. These principles need to be enshrined in the post-2020 Renewable Energy Directive so investors can bank on a predictable regulatory framework and deliver on the EU’s 2030 renewable energy target at the most competitive cost.”

Project developers had entered 2,137 MW of onshore wind projects into the auction. Of these 37.8 % (807 MW) were successful, indicating that there was fierce competition and a large number of developers have tried to secure support for their projects - while those less lucky will have lost a lot of money spend in planning costs.

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Renewables covered around 52 percent of gross power consumed in Germany during the first quarter of 2020. This all-time high was driven by a combination of one-off events. Preliminary calculations by the Centre for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW) and the German Federal Association of Energy and Water Management (BDEW) yielded this figure. February’s record winds were followed by an unusually sunny March. Power consumption was also down by one percent from the same period last year.

In the first half of 2019, solar, wind and other renewable sources accounted for 44 percent of the electricity consumed in Germany, marking a record high. Preliminary calculations by the Centre for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW) and the German Federal Association of Energy and Water Management (BDEW) yielded this figure. Renewables had accounted for 39 percent of electricity consumption in the first half of 2018.